For IBOR, Pick a Definition and Stick To It

anthony-malakian-waters
Anthony Malakian, US Editor, WatersTechnology

Sometimes you get lucky. On Monday, Mother Nature dumped down snow on New York and then did so again on Wednesday, with a third closing performance still scheduled for this Sunday. But on Tuesday the sky was clear, even if the sidewalks were slick.

That morning, Waters hosted an IBOR Breakfast Briefing in Midtown Manhattan, gathering end-users and vendors from around the industry to debate the latest advancements for building these systems.

What I found to be most interesting from the two panels and two presentations was that the definition of what entails an investment book of record, how it should be run and who should have control, all appear to be a moving target. Certainly, it would seem that the vendors pitching their wares have adjusted their strategy of late.

In the past, vendors seemed to present IBOR as a front-, middle- and back-office, all-encompassing data management solution. Some still do. Others may still believe that to be the case, but now they are targeting their pitches a bit more with IBOR constituting a front-office system that, first and foremost, is there to make a portfolio manager's life easier.

This played well for Jay Vyas, head of quantitative investing at the Canadian Pension Plan Investment Board (CPPIB), which manages about $173 billion. During his keynote address he made it very clear that an IBOR should be a tool to support traders and PMs, and it's not a reporting or compliance platform. The end thesis was that an IBOR is not an accounting book of record (ABOR) and should be kept completely separate from an ABOR, apart from being reconciled at end-of-day.

Barry Chester, who founded the consultancy Barry Chester & Company, said that before any firm embarks on an IBOR implementation ─ which are long, arduous and complex ─ the business leaders must first decide on how exactly they will define their IBOR.

This is an important note that may seem obvious, but is born of experience. If the back office is expecting one set of functionality and the portfolio managers are expecting something completely different, you're going to be left with a system that is tangled, inefficient and, ultimately, costly.

Vyas noted during a panel discussion that within CPPIB, his group runs its own IBOR, but that IBOR is not shared with other groups. Those groups are left to build their own. Meanwhile, BMO Asset Management's Todd Healy said that their IBOR, which took three years to build, is run across the organization. At CPPIB, PMs handle all data input; at BMO, the PMs have ceded that control.

This is all to say that there simply isn't a standardized, industry-driven definition for IBOR. So basically it's up to the firm itself to create its own clear and prescriptive definition, and stick to it.

Click here to find all of our IBOR coverage.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe

You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.

Waters Wrap: The tough climb for startups

Anthony speaks with two seasoned technologists to better understand why startups have such a tough time getting banks and asset managers to sign on the dotted line.

You need to sign in to use this feature. If you don’t have a WatersTechnology account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here